A Dynamic Approach to Country-Of-Origin Effect

Country-of-origin effect

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A dynamic approach tocountry-of-origin effect

Shlomo I. Lampert and Eugene D. JaffeGraduate School of Business Administration, Bar-Ilan University,

Ramat-Gan, Israel

The objective of this paper is to propose a dynamic model of country-of-origin(CO) effect. While there is no consensus definition of CO (Sauer et al., 1991), it isgenerally understood to stand for the impact which generalizations andperceptions about a country have on a person’s evaluations of the country’sproducts and/or brands. Thus, it is posited that the image a person has about acountry and its product offerings influence buying intention. Therefore,measurement of the CO construct is necessary so that marketing strategy andproduction sourcing can be determined. In the sections that follow, we introducethe concept of product image life cycle and a dynamic model of country image.

A brief literature review of COSome authors consider CO as an overall perception of a country (Nagashima,1977; Wall and Heslop, 1986) without reference to product line. There isevidence, however, that CO is contingent on a specific product line (Cattin et al.,1982; Eroglu and Machleit, 1988; Gaedeke, 1973; Han and Terpstra, 1988;Helsop et al., 1987; Wang, 1978) or that there is linkage between specific productcategories and country image dimensions (Roth and Romeo, 1992). Otherstudies have found that CO is moderated by familiarity with a product(Heimbach et al., 1989), product brand (Han and Terpstra, 1988; Seaton andVogel, 1985; Tse and Gorn, 1992; Witt and Rao, 1992) and use of productinformation (Han and Terpstra, 1988; Hong and Wyer, 1989; Hong and Toner,1989; Kieker and Duhan, 1992; Obermiller and Spangenberg, 1989).

While more recent CO research tends to be multi-variate, measuring theeffect of CO on consumer perception along with other marketing variables suchas price (Johannson and Nebenzahl, 1986; Seaton and Vogel, 1985) andpromotion (Ettenson et al., 1988; Head, 1988), most studies are univariate andstatic. None of the existing research considers CO as a dynamic process, i.e. howCO changes over time. The few longitudinal studies that measured changes inCO over two or more time periods, e.g. Wood and Darling (1992), failed toprovide a theoretical explanation for the changes observed.

The effect of product image on perceptionOur CO construct is based on an assumption that there are brand and countryimages over and above the perceived attributes of products associated with acountry or being sold under a specific brand name. We further propose that there

European Journal of Marketing, Vol. 32 No. 1/2, 1998, pp. 61-78,

© MCB University Press, 0309-0566

Accepted January 1997

EuropeanJournal ofMarketing32,1/2

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are two-way interactions among these constructs that change over time. Forexample, the image of Japanese-made products experienced a dramatic changein the USA and western Europe. During the 1950s a “made in Japan” labelsignified a cheap imitation of products made-in industrialized countries. Later,Japanese manufacturers shifted production to knowledge-intensive products andtargeted income-elastic market segments as part of an overall marketingstrategy intended to improve image. Today, the “made in Japan” label stands forhigh quality, excellent workmanship and innovative products. How similarchanges in image occur over time should be explained by a dynamic CO model.

Generally speaking, the more homogeneous and standardized products are ina product category, the less is the effect of perceived product image on demand.Alternatively, the higher the level of differentiation in a product category, themore the perceived product image effects demand (Lampert and Jaffe, 1993). Theleast effect of product image is likely to be for commodities and the highest effectamong high prestige consumer products. Figure 1 shows the effect of productimage on demand as a function of the level of product differentiation. The effectof product image is measured by the ratio of two brands’ prices within the sameproduct category where the range of prices is an indication of the extent to whichpeople are willing to pay more for a given product type due to productdifferentiation. It is important to note that these price ratios are much more dueto marketing than to economic variables. Pricing a high image brand of shampooat $1.50 per ounce and a low image one at 10 cents per ounce does not reflect aproduction cost differential, but an added perceived value.

As shown in Figure 1, all consumer and industrial products are classifiedinto four levels of product differentiation: homogeneous, low differentiation,medium differentiation and high differentiation. Homogeneous products arethose which most customers regard to be practically the same. In a consumers’market, products like sugar and salt, or services like photocopying areconsidered to be the same regardless of supplier. In the industrial market, goodslike silver, copper and raw materials are seen as being practically identical.Ideally, in a perfect market these products should have identical prices.However, market imperfections such as the lack of market information can leadto small price differentials in products and services.

Low differentiation products are those which customers perceive to havesome added benefits, and are willing to pay more for them. In the consumermarket, an example is the price of gasoline where two adjacent gas stations mayhave a price differential of 10 per cent for essentially the same octane gasoline.In the industrial market, relatively standard insurance policies have over 20 percent price differentials.

Medium differentiation is typical for those products which the customerperceives as being significantly different along certain features or dimensionsand is willing to pay considerably higher prices. In the consumer market,examples are appliances and soft goods. In the industrial market, examples aresoftware packages performing similar functions which can range significantlyin price.


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High differentiation products are those for which the customer perceives verylarge differences between brands or suppliers and is willing to pay a highpremium for that perceived difference. Highly differentiated consumer goodsinclude luxury products like perfume, designer clothing and high fashionwatches. In the industrial market, examples include custom designedmachinery, consulting services, interior design and the like. Here the price ratiosare not even bounded.

In summary, it is evident that there is a wide range of prices for similar typeproducts beyond the differences in real cost. However, as long as people are

Figure 1.Effect of productdifferentiation on

product imagevariability

Product image effect

1.70

1.30

1.10

1.00Homogenousgoods

Low differentiationgoods

Mediumdifferentiationgoods

Highdifferentiationgoods

Staples like:sugar,salt, etc.

Gasoline,tires,toothpaste

Vacuum cleaners,branded food items,colour televisions

Cars,radios,clothing,perfume,watches

Commoditiese.g. cotton,metals,raw materialse.g. steel ingots,basic chemicals

Componentse.g.memory chips,micro processors

Computers,machinery

Customizeddesigned machinery,special chemicals

Productdifferentiation

Consumergoods

Industrialgoods

Marketpriceratioof sametypegoods


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willing to pay for product differentiation, perceived or real, these pricesrepresent the value of a product independent of objective inputs.

It should be emphasized that the phenomena described in Figure 1 represent afree market economy, in which competing products are available to all customersat given, listed or posted prices at any given point in time, sold in retail outlets orthrough other suppliers. Thus, the price differences may not be attributed tosituations where market inefficiencies are causing supply shortages where evenprices of commodities or standard goods may have high price variability.

The role of brand and country image in creating product imageWhen a brand is well established in a domestic market, its image is formed asconsumers become familiar with its attributes (Gaedeke, 1973; Heimbach et al.,1989; Hong and Wyer, 1989; Nagashima, 1970; Schooler, 1971). A new marketentry may have an undefined brand image until it becomes known, unless it isintroduced under a family brand, like Heinz, IBM and Johnson and Johnson, whereall company products share a common brand name. When this is the case, the newproduct’s image takes on the established family image (Bilkey and Nes, 1982).Thus, when IBM introduced its personal computer it had immediate acceptancedue to its well established brand name in mainframes. In international marketing,product image is affected by country of origin before brand name plays a role. Thecountry-of-origin effect on a new brand has a similar role to family brandingwhere the country-of-origin’s image is generalized to the new brand.

Country image may be an asset when it is positive and a liability when it isnegative. It has been established that the country-of-origin effect is productspecific (Cattin et al., 1982; Eroglu and Machleit, 1988; Gaedeke, 1973; Hans andTerpstra, 1988; Heslop et al., 1987; Wang, 1978). Thus, perfume, fashions andwine made in France have a positive image but cars, television and hightechnology products have a less positive image. The same country image maybe shared by one or several types of product, but not by all product categories.Furthermore, a given country’s products may have varying images acrosscountries. For example, Japanese-made technical products have a more positiveimage in the USA than in Europe (Bilkey and Nes, 1982). This shows that thecountry-of-origin effect is both product category specific and country specific.

The product image life cycleDifferences in CO occur over product categories and within categories, varying byindividual product and brand. Familiarity and experience with a country’sproducts moderate CO. Three situations illustrate these differences. First, asituation in which the individual has no experience with the product, but has ageneral image about the country, which is projected to the specific productcategory (Erickson et al., 1994; Johannson, 1989; Johannson et al., 1985). This typeof image is referred in the literature as a “halo effect”. Halo is defined as “thetendency to rate individuals or institutions either too high or too low on the basisof one outstanding trait (Chaplin, 1973). Krech et al. (1969) add:


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The so-called halo effect…generally refers to the fact that the favorableness (or unfavorableness)of one’s first impression of another very often leads us to attribute to him all manner of good (orbad) traits. It is as if we tended to make first a broad evaluative judgment about a social objectand then a halo of specific traits compatible with that single, organizing judgment around it…”.

A country’s halo effect in international marketing refers to the rating of itsproducts based on perceived ability to produce a specific product category,denoted here as IH (Figure 2) in which an individual attributes a certain quality ortrait to that product category.

A second situation occurs when an individual has tried a specific brandoriginating from a given country. Product image is largely based on theperceived benefits of that brand. While country image plays a minor role, if any,the product image is determined largely through the salience of a specific brand,denoted as IB, replacing the original IH.

Figure 2.Cumulative adoptionprocess of country as

product type and typeof image

Adoptionproportion

Marketentry

Time

“Earlymajority”

‘“Latemajority”

“Earlyadopters” “Laggards”

“Innovators”

13.5% 34% 34% 16%2.5%t

Country A’s product type “adoption process”

Market potential

Unrealizedpotential

1.0

0.5

Marketentry

0

“Adopters”IB, IF

Timet

“Non-adopters”IH

Key

IH - Product image due to country A’s halo effect

IB - Brand image of country A’s product (brand familiarity)

IF - Country A’s product type image (product type familiarity)

IH


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A third situation is when a consumer has experience with more than one brandoriginating from the same country. In this case product image is based onmultibrand familiarity which is closer to the individual’s subjective evaluationof the country’s products denoted as IF. In this case, IF represents the countryimage. Note that a person may have a specific brand image – IB, and a countryimage of IF at the same time.

Therefore, it is important to determine if an individual’s product image isbased on halo (IH), on a specific brand (IB), or multibrand familiarity (IF), eachrepresenting a different cognitive state. This is particularly crucial when thehalo effect, IH, is dominant, i.e. during the pre-introduction stage. At this stage,IH, determines the ease or difficulty of product entry to a new market in aforeign country. The higher the familiarity with a country’s product category,the more it is evaluated on the basis of its real and perceived value.

In presenting the product image life cycle (PILC) two different approaches willbe used. The first approach is based on a new product adoption process (Rogers,1983), the other on the concept of form product life cycle (Polli and Cook, 1969).

Considering first the new product adoption process, initial export to a givenmarket can be viewed as being similar to a new product introduction in thatmarket. Figure 2 (top) shows the “adoption rate” of a product until it reaches itsfull potential. Figure 2 (bottom) shows the cumulative “adoption process” of onecountry’s product in another country, starting with market entry, and ending inthe realization of full market potential. Before market entry, the perceived imageof potential customers is given as IH, the country of origin halo effect. Once theproduct has been introduced, those who tried one or more brands reach imagelevels of IB and IF and are referred to as “adopters”. Non-buyers in the potentialmarket are referred to as “non-adopters” representing unrealized potential.

Once a product is successfully launched in a foreign market, the proportionof potential customers having an IH image level shrinks as a function of time,while customers having an IB and IF image increases. This means that morepeople have an image based on actual experience and familiarity as a functionof time, while fewer people determine image based on halo.

Figure 3 presents a modified PILC. It starts with the pre-introduction stage(rather than with the accepted introductory stage), and ends with the maturitystage (rather than with the decline stage). The pre-introduction stage is identicalto the time before market entry as shown in Figure 3. At that time the onlyexisting product image is halo effect IH. During this period, a company in thecountry-of-origin has to decide whether, or at least under what conditions, it canstart exporting to various countries. At this stage it has to first determine itscountry image in potential target countries. Second, based on its product imagesin the various countries, specific target markets may be selected. Theintroduction stage is typified by the entry of a single brand, low sales volume,but with increasing product awareness. The product image is still dominated byIH, but the brand effect, IB, starts to become salient, replacing IH for those whoeither bought or tried the brand.


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During the growth stage, market acceptance is high; however, competitionintensifies, as new brands of the country of origin enter the market, often cateringto the same market segment. Those who either buy or use a specific brand,establish a brand image IB substituting the previous image held due to thecountry’s halo effect IH. For those who bought or used several brands of a givencountry, their initial country halo effect IH, shifts to both a brand image, IB, foreach specific brand as well as a country image based on multibrand familiarity IF.Each brand has shared attributes, e.g. outstanding engineering for Germanproducts, or prime design for Italian and French products. Among those whohave no experience with the country’s products, the halo effect, IH, remains salient.

During the maturity stage, sales growth slows, new product entries areslightly differentiated, and use and experience result in higher familiarity withthe various brands. The proportion of people who have acquired brand imageIB, and multibrand familiarity, IF, reaches a plateau, while the proportion ofpeople remaining at the IH level decreases.

To sum up, the above discussion of a country’s PILC differentiates between twopopulations: those who tried or used at least one brand, and those who did nothave any experience with the country’s products. It was further indicated that forthose who had experience with one brand, the country image for that productcategory shifted from a halo effect IH to brand image IB, and for those experiencingmore than one brand, to multibrand familiarity IF. Those who did not have anydirect involvement with the country’s products were assumed to remain at IH.

Figure 3.The product life cycle ofcountry as product type

and its relationship toproduct image

Market potential

Unrealizedpotentialat time t

IB, IF

Key

IH - Image due to halo

IB - Image due to brand familiarity

IF - Image due to product type familiarity

IB

IB, IFIH

IH

Preintroduction Introduction Growth Time

Country A’sproducttype sales

tt

Maturity


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It should be noted that these concepts are relative rather than absolute. Thetime span between pre-introduction to maturity takes years and even decades.For more than 20 years, following their introduction, Japanese-made cars werestill at the growth stage in the USA. Also, the maturity stage itself may for allpractical purposes be unlimited in time. French perfume reached the maturitystage in the US many years ago, and no end is in sight. Obviously, over suchlong periods of time the number of brands offered to the market by a givencountry and domestic competitors is constantly changing, and their relativeperceived image may change as well. Thus, for example, Japanese cars werefirst perceived as low price-low quality, and some are now positioned as highprice-high quality. Thus, the IH, IB and the IF are not likely to stay constant overtime either in their absolute or in their relative perceived position, yet they arerelevant at any point in time for both evaluation and strategy implications.

At times, especially toward the end of the growth stage and during thematurity stage, highly successful brands may become an entity in themselvesand are less influenced by their actual country-of-origin image. Customers maystill regard these brands as being “made in” the original country even whenproduction shifts to other countries. Examples include brands like Reebok,Sony and Yves Saint Laurent which are produced in several countries, yet theirbrand name is still associated with their original country of origin.

However, when a producing country has a low country image in a specificproduct category, and customers are aware of the product’s origin, the countryimage may tarnish the brand’s image. A good example of such a case isreported by Johansson and Nebenzahl (1986), showing consumers’ willingnessto pay a higher price for a Volkswagen made in Germany than for the same carmade in Brazil and for well-known brands (e.g. GE and Sony) made indeveloped, rather than developing nations (Nebenzahl and Jaffe, 1991).

Country product image dynamics – the single brand caseIn considering a country’s product image dynamics, the single brand is discussedfirst. The single brand case is fairly common, especially when the country orindustry of the country of origin is relatively small. An example is the Yugoautomobile, which is the only Yugoslavian durable good sold in the USA. Similarly,Phillips is the only electronics company from The Netherlands which is known inother countries. It is common for agricultural producers to use a single brand namefor their produce; thus thousands of orchard owners in Israel export citrus underthe brand name Jaffa, and hundreds of tomato growers sell their produce under thebrand name Carmel. This same analogy applies to Chiquita Bananas importedinto the USA from South America. In the single brand case, brand image is largelya reflection of country image, i.e. IB0 = IH (Figure 4 left, bottom). For those withbrand experience, brand image IB, becomes salient, and the country product imageIF, becomes largely a reflection of brand image IB, (Figure 4 right, top). Since thehalo effect always precedes brand familiarity, the brand image reflected from thecountry’s halo effect is denoted as IB0, and brand familiarity as IB1.


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A country’s product image over time is a dynamic process. The process startswith the halo effect image, IH reflected on a country’s brand, resulting in IB = IH(see Figure 5(a) and (b) arrow 1). Yet, often in reality the brand is either perceivedbetter or worse than expected. In Figure 5(a) brand performance is perceived tobe above initial expectations, i.e. IB ≥ IH. Thus the initial IB shifts to the level ofIB1 (arrow 2 in Figure 5(a)). The end result is that the country image becomes areflection of the higher brand image, and IF1 = IB1 (arrow 3 in Figure 5(a)),indicating an improvement in the country’s product image. Figure 5(a) can bealso reached through a different scenario, which is likely to play an importantrole in strategy formulation. A country’s brand image, IB, may actually beperceived to be identical to its country-of-origin halo effect IH. However, as aresult of concerted effort to improve brand quality, an image level of IB1 may beobtained. A case in point is the past effort made by Japanese companies andrecent ones by South Korean manufacturers to improve their images in the USA.

Figure 5(b) presents a case in which the halo effect IH was first reflected in thebrand image, IB, (arrow 1), yet, the brand did not meet expectations, i.e. IB ≤ IH.The result is a shift in brand image from IB to IB1 ≥ IB, (arrow 2). The lowerbrand image IB1 led to a lower country image IF1 = IB1 ≤ IH (arrow 3). Two casesdemonstrate these phenomena: the Yugoslav-made car Yugo, positioned in theUSA as the new Volkswagen, lost ground after initial sales. A similar casehappened in Israel to the Romanian-made Delta automobile, which initially soldmoderately well, but following consumer dissatisfaction, lost much of its sales,as well as its initial favourable image.

Figure 4.Image dynamics:

reflection of country andbrand images

IB = IH

Countryimage

Country A’simagereflectedfrom brandfamiliarity

Country A’shaloeffect

Brandimagereflectionof country A’shalo

Brandimagebased onbrandfamiliarity

IH

IF

IC

IF = IB1

IB0 IB1

(t0) (t1)

Brandimage

IB


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It should be noted that there is a delayed effect until change in a brand’s qualitywill affect its image. In order to shorten the period between a change in abrand’s quality and its effect on country image, a substantial and prolongedmarketing communication effort will be needed, as the Japanese case indicates.

Figure 5.Shifts in brand andcountry image

IB = IH(t0)

Countryimage

IF1

(t1)

IC

IB > IH

IB1

(t1)

Brandimage

IB

IH(t0)

3

1

2

(a)

IB = IH(t0)

Countryimage

IF1

(t1)

IC

IB < IH

IB1

(t1)

Brandimage

IB

IH(t0)

3

1

2

(b)


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Country image dynamics – the multibrand caseThe more typical case in international marketing is that once a countrysucceeds in penetrating a foreign market with one brand, more brands tend tofollow, often competing in the same market segment. Furthermore, each brandmust have some unique attributes to gain differential advantage. The firstquestion is how are these different brands reflected in country-of-origin image?

To answer this question, the concept of image crystallization is proposed. Bycrystallization is meant the extent to which country image is formed into aunified and consistent construct. The more unified and consistent the countryimage across brands, the higher is its level of crystallization. The more diffusedand inconsistent the country image across brands, the lower its level ofcrystallization. Thus, country image can be perceived as a summary construct,similar to a single brand image as suggested by Han (1989) only when countryimage is highly crystallized.

Country image crystallization becomes an issue only when several brands ofthe same product category sell in a foreign market. This usually happensduring the growth and maturity stages of the country’s product image life cycle.During the pre-introduction stage where only a halo effect exists, and during theintroduction stage, when usually only one brand is introduced, country imagepossesses a high level of image crystallization. At these periods there are noother entities to detract from such an image. Also, sales are either non-existentduring the pre-introduction stage, or are very low during the introduction stage.However, the growth and maturity periods are the most significant ones interms of both sales level and duration. At these periods, multiple brands of thesame country of origin are competing with one another, and each tries toestablish itself as a separate entity in the customer’s mind. At this point, theproblem of country image crystallization arises.

Is it better for a country to have high or low image crystallization? Theanswer to this question is not equivocal. When the initial country image ispositive, and new brands tend to reinforce it, a high level of crystallization isobviously desired. This is achieved by maintaining one or more majorcharacteristics in common, while not sacrificing brand individuality. Successfulexporting countries have been able to do it. Thus, Japan is known for itsworkmanship, France and Italy for their design, and Germany for itsengineering. Having a high level of crystallization simplifies customer choice,and when crystallized image is high, the country’s brands are likely to beappealing.

Figure 6(a) presents an hypothetical case in which after an initial halo effectimage IH at t0, three brands are introduced. At t1 each has established its ownimage IB11, IB12, IB13, respectively, where the lower numerical subscript relatesto the time period t1 and the upper numerical subscripts represent the brandnumbers = 1, 2 and 3, respectively. IC represents the country image axis, and IB,the brand image axis. In spite of the fact that each brand has its owndifferentiated image their common characteristics are all reflected into a single,


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common country product image of IC = IF1. This is the case of high countryimage crystallization, meaning that the country image comes across as asummary construct (Crawford and Garland, 1988; Hong and Wyer, 1989;Howard, 1989). Practically, one would expect that a highly crystallized imagewill result in a perceptual map where the different brands will tend to cluster

Figure 6.High versus lowcountry imagecrystalization

High country image crystalization

IF1

(t1)

IC

IB(t0)

1B

IH(t0)

31

2

(a)

2 2

3 3

IB11

(t1)

IB12

(t1)

IB13

(t1)

Low country image crystalization

IC

IB(t0)

1B

IH(t0)

31

2

(b)

2 2

3

3

IB11

(t1)

IB12

(t1)

3

2

IB13

(t1)

IB14

(t1)

Rangeof IF1


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together on common characteristics, as Johansson and Thorelli (1985) found tobe true in the case of Japanese cars.

Figure 6(b) presents a hypothetical case in which after an initial halo effectimage of IH at time t0 four brands were introduced, and at time t1, each hadestablished its own image, IB11, IB12, IB13 and IB14, respectively, where the lowernumerical subscript relates to the time period t1, and the upper numerical valuesrepresent brand numbers 1, 2, 3 and 4, respectively. Again, the IC axis representsthe country image level, and the IB axis represents brand image.

As can be seen in Figure 6(b), brands 1 and 2 are above the original image IBreflected by the halo effect image IH. The other two brands, 3 and 4, have a lowerimage than IB. Furthermore, as each brand has different attributes, they shareno common characteristics. As a result, each brand projects itself on the countryimage axis, resulting in a highly diffused country image. IF1 is not a singlevalue, as it appears in Figure 6(a), but rather represents a wide range of valuesconsistent with the original brand variability. Obviously, this is a case wherecustomers do not have a unified image regarding that country’s brands,requiring that each brand be judged by itself. A case in point is the image ofEnglish made cars, where Rolls Royce, Bentley and Jaguar have a high image,while Rover and MG have a moderate image.

It is very likely that a low image crystallization tends to reduce the country’smarket potential in the long run. However, low crystallization may be necessaryfor a transient period, in moving from lower to higher country image. The newbrands have to break away from the initial low image to the higher one. It ishighly likely, that during the 15 years in which Japan’s image in the USA movedfrom low to high quality, a period of low image crystallization was necessary.

The time dimension in brand and country imageWe posited above that over time, more and more people replace the halo effectimage IH, by either a brand image IB, or a multiple brand image IF. Once thishappens, brand image IB, the single brand case, and the multibrand image IF,the multibrand case, become the salient factors in the determination of countryimage IC. Any change in country image is a function of the respective change inthe brand image IB, or the multiple brand IF.

For a perceptual change in a country’s product image to occur, threeconditions have to be met. First, there has to be an absolute or relative change inIB or IF either through an active campaign to change them, or by default, due toa change in the image of competing brands originating from other countries.Second, the magnitude of the change has to be noticed by the market. Third, thechange has to be maintained over a substantial period of time to be perceived asreal. Only after these preconditions are met, is it likely to affect the country’sproduct image.

Figure 7 shows that for the single brand case, a change in the country’sproduct image, IC , is a function of a noticeable change in the brand image IB.Even though IC is a reflection of IB, it is not an instantaneous, but rather adelayed change, indicated by ∆t. Also, it is clear that a change can be in both


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directions. It may move to a higher level image, like the Japanese car case – theleft side of the curves – or to a lower level, like the American car case – the rightside of the curves. (The intersection point between the curves does not have anyspecial meaning.) Thus for the single brand case: IB (t) = IC (t + ∆t).

The multiple brand case, where there is high image crystallization, behavesin a very similar way to the single brand case. The only required change inFigure 7 is to substitute IB(t) by IF (t).

Thus, IF (t) = IC (t + ∆t).

The only difference in the multibrand case, is that a change in the countryimage IC is dependent on a consistent change in individual brands which has totake place across all, or at least most brands.

Figure 8 presents the multibrand, low crystallization case, i.e. where achange in individual brand images is not consistent, or there are no commoncharacteristics to unify them. In that case the range representing IF (t) moves toeither higher or lower levels of image, resulting in a similar change in thecountry image after a time delay of ∆qt.

Figure 7.Change in countryimage (IC ) due tochange in brand image(IB ) overtime

Image

Time

∆t ∆t

IB (t)

IC (t + ∆t)

t

Ι

Figure 8.The relationshipbetween lowcrystalizationmultibrand image (IF)and country image (IC)over time

Image

Time

Brandimagevariability

IC (t)

t

Ι

∆t∆t

IF (t)


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The duration of ∆t depends on the relative marketing effort done by the specificcountry of origin in trying to improve its image. The higher the relative effort,the shorter the ∆t, and vice versa. In many cases a decline in brand and countryimage may be owing to relatively ineffective marketing strategy. This meansthat a country is not likely to maintain product or brand images over timeunless effective marketing action is taken through a concerted effort bymanufacturers selling in the target market.

The boundaries of a country’s image within and across productclassesAs shown above, country image is generally known to be product categoryspecific. The question is, what is the span of influence that the country’s imagecarries. In some cases country image is confined to a type of product within aproduct category, at times it relates to a whole product category, or to multipleproduct categories (Johansson and Papadopoulos, 1993). Thus, for example,England has a strong country image in the USA for luxury cars, due to RollsRoyce and Bentley. Yet, it has a weak image for other type cars. Similarly, Japanhas a very strong country image in medium level cars, but not for the high endof the line. On the other hand, Japan has a strong image in cameras over thewhole range of camera types. Germany has a strong image on the full range ofcars from small economy cars – Volkswagen – to the most luxurious car –Mercedes. Moreover, Germany, Japan, France, Italy and other countries have astrong image in several product categories: Japan in cameras and consumerelectronics; Germany in cars, tools and machinery; France in wine, perfume andclothing; Italy in furniture, shoes, and sports cars. Looking at these realities, apositive (and possibly negative) country image can spill over from one productclass to another. However, such spill-overs are more likely to happen amongproduct categories sharing certain characteristics. Thus, Japan and Germanyhave established their image in products having a high level of technology;France is more associated with product categories relating to taste; Italy is moreregarded in product categories involving attractive product design.

Thus it seems that the boundaries for country image do not have to beconfined to a specific product category. Moreover, it appears that widening thescope of these boundaries may be easier when certain commonalities areshared. These phenomena are obviously very important for strategyformulation at the country level, regarding industries that should beencouraged to achieve the highest impact within a given time frame.

Research implicationsThe conceptual model of country-of-origin effect suggested here will hopefullyencourage others to further theory-driven research. There are ample researchimplications from which propositions can be drawn and operationalized intotestable hypotheses. Some of the concepts that deserve immediate attention arethe assumptions about changes in image along a product life cycle and imagecrystallization. These concepts have strong implications for marketing strategy.


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If indeed the effect of CO on brand image is moderated by stage in the productlife cycle, then marketing strategy will have to be adapted over time. Studies inthe composition of CO and its change over time should be incorporated intolongitudinal designs.

The effect of image crystallization needs to be tested. This concept hasimplications both for export-intensive countries and for the productionsourcing strategy of multinational firms. Different marketing strategies arecalled for depending on whether CO comes across as a halo effect or as asummary construct. Another area of concern that may be addressed by imagecrystallization is the standardization versus adaptation issue (Jain, 1989;Szymanski et al., 1993) in international marketing. High crystallization of afavourable brand image in a number of markets may allow the introduction andglobal proliferation of a single brand, while low crystallization would requirethe customization of brand names.

Another area of research which deserves attention is the role of countryimage in trade theory. According to Porter (1990), most theories of internationaltrade are based on cost factors alone, without considering the influence ofmarketing variables, such as those embedded in CO. We suggest that a model ofinternational trade may be developed using relative cost factors on the supplyside and country-of-origin effect operating on the demand side. IncorporatingCO explains how consumers evaluate imported products and suggests that theCO cue, in addition to supply side conditions, affect buying intentions.

A further research subject concerns the policy implications of CO. Mostcountry-of-origin research has studied the implications of CO on the firm.However, there are also important consequences for governments, especiallythose of developing countries. For example, eastern European countries wouldlike to attract multinational corporations to produce or assemble global brandsfor export. Such a step may – according to the theory outlined above – improvetheir country image. In this case governments of developing countries wouldencourage foreign investment for this purpose. On the other hand, governmentsthat wish to encourage the consumption of home products as substitutes forimports would have to undertake a campaign to promote the image of domesticmade products. Research should be undertaken to classify the various COpolicy implications for government and how they may be successfullyoperationalized.

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A Dynamic Approach to Country-Of-Origin Effect

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